EXECUTIVE SUMMARY

The interactions between service employees and customers have strong implications in a complaint handling context as customers seeking redress after a service failure may require service employees to perform “extra” behaviors to enhance customer evaluations. As such, customer service employee performance can play a key role in affecting customer outcomes in complaint handling settings. Yet, there is little evidence as how to best gauge service employee performances in such contexts. Some research suggests that service employees are in the best position to gauge the relationships between their performances and customer outcomes, while other research suggests that supervisor-ratings of employee performance are more predictive of outcomes than employee-ratings of their own performance. The authors present two field studies in a complaint handling setting to examine predictive validity differences of service employee ratings of their own performance vs. supervisor ratings of employee performance with respect to customer satisfaction and customer likelihood of spreading positive word-of-mouth (WOM) after service recovery efforts.

Based on rater goal theory and organizational goals in a service climate research, the authors hypothesize that supervisor ratings of service employee performance will be more strongly associated with (predictive of) customer satisfaction and WOM than will employee self-ratings of their performance. The results generally show that supervisor ratings are more strongly positively related to customer satisfaction and WOM than are employee ratings of their own performances. Based on recent evidence linking performance-based variables to customer outcomes, the authors also hypothesize that employee performances will show linear and curvilinear relations with customer satisfaction and WOM. The results show that both supervisor-ratings and employee-ratings are related to customer satisfaction and WOM in a curvilinear fashion. Specifically, employee extra-role performances (toward customers and the firm) show increasing returns for customer satisfaction and WOM at the higher levels of performance, and employee in-role customer performance generally shows a decreasing return for customer satisfaction and WOM at the higher level of customer in-role performance.

Collectively, these results suggest two managerial implications. First, given the importance of customer satisfaction in retaining current customers and WOM in attracting new customers, the finding that supervisor ratings of performances were better at predicting customer satisfaction and WOM than were employee self-ratings is important.  If an organizational goal is to determine what levels of employee performances drive customer evaluations, supervisor ratings of customer service employee performances may be the preferred form of measurement. Second, regardless of rating source, firms attempting to maximize employee in-role customer performance inputs may experience decreasing returns for customer evaluations in the service recovery context; but firms attempting to maximize employee extra-role performance inputs may actually “delight” customers, i.e., increasing returns for customer evaluations. Thus, firms may want to assess the time and costs of in-role (extra-role) employee performances against the incremental decreases (increases) in customer outcomes.